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Skechers lawsuit claims adidas had unfair advantage by secretly paying basketball players

A legal spat among apparel companies has produced a lawsuit tied to the ongoing federal investigation into corruption in college basketball.

In the lawsuit, Skechers accuses adidas of false advertising and unfair competition related to the college hoops scandal in a complaint filed Wednesday in the U.S. District Court for the Central District of California, Western Division.

The lawsuit, first reported by the Courier Journal, alleges that adidas “engaged in a deliberate, deceptive and illegal campaign to prop up the reputation and supposed brand appear of its footwear products.”

The allegations go on to say adidas created an appearance that top-caliber basketball players chose its products, when in reality the company “coopted young players into wearing and expressly or implicitly endorsing its products by funneling hundreds of thousands of dollars in secret payments to players, their coaches, and/or family members in violation of National Collegiate Athletic Association (“NCAA”) rules.”

An April 10 federal indictment alleges Jim Gatto, a former adidas executive, helped funnel $40,000 from the apparel company to an N.C. State basketball player’s father, believed to be Dennis Smith Sr. The money was given to an unnamed N.C. State basketball coach by an adidas consultant, according to the indictment. The coach represented that he had delivered the money to the father of Dennis Smith Jr., who was a star guard for the Wolfpack before leaving for the NBA after one season.

Dennis Smith Sr. and Dennis Smith Jr. were not named in the federal indictment.

Adidas and Skechers have other history in the courtroom, even some ongoing this week. On Thursday, a U.S. appeals court ruled in a case in which they were in dispute over sneaker design rights, according to a Reuters report.